IMF approves $1.2 billion to support Jordan’s economic program

Central Bank of Jordan CBJ
(File photo: Jordan News)
AMMAN – The International Monetary Fund (IMF) approved of a new Extended Fund Facility (EFF) for Jordan, spanning four years, allowing an initial disbursement of $190 million to support the government's economic program, Al-Mamlaka TV reported.اضافة اعلان

The Executive Board of IMF approved the new four-year EFF agreement with Jordan, amounting to $1.2 billion, noting that the remaining amount will be distributed over the program's implementation stages.

The new EFF arrangement aims to support the government's efforts to maintain overall stability, gradually adjust public debt on a downward path, protect social and capital spending, improve financial conditions, enhance the efficiency of the electricity sector, and maintain an appropriate exchange rate policy.

IMF Deputy Managing Director, Kenji Okamura stated that Jordan has successfully navigated through various shocks in recent years, maintaining overall stability and moderate economic growth through sound policies and substantial international support, adding that Jordan also made significant progress in implementing structural reforms.

Okamura emphasized the importance of the Central Bank of Jordan (CBJ) of Jordan's prudent policies, which helped maintain the stability of the Jordanian dinar and financial stability, recommending that monetary policy should continue focusing on maintaining monetary and financial stability by adjusting interest rates as needed to support the exchange rate.

Seven successful reviewsThe new program's ranking builds on Jordan's strong performance under the previous arrangement, and six successful reviews were completed on time. The IMF highlighted Jordan's progress in financial integrity, removing the country from the Financial Action Task Force's grey list (FATF). Furthermore, implementation of recommendations from the Financial Sector Stability Assessment jointly conducted by the IMF and World Bank in 2023 is crucial for further strengthening financial sector oversight.

Okamura also emphasized the need for continued donor support to help Jordan navigate a challenging external environment, host refugees, and maintain reform momentum.

Jordan’s strategic choiceMinister of Finance, Mohamad Al-Ississ emphasized that the program is a strategic choice for Jordan, prepared by relevant Jordanian ministries and institutions.

CBJ Governor Adel Al-Sharkas stressed the importance of the new EFF program in continuing the reform approach, reinforcing the resilience of the national economy, and enhancing flexibility to face shocks.

 CB is committed to maintaining monetary and banking stability, including the fixed exchange rate policy with the US dollar. CB also aims to enhance the digitization of financial services, expand financial inclusion, and improve the insurance sector to align with global best practices. Additionally, efforts will be directed toward strengthening anti-money laundering and counter-terrorism financing systems.

The program does not include raising or imposing new taxes, and the government remains committed to combating tax evasion and avoidance to achieve tax fairness without adding new tax burdens on citizens.

Economic predictions
The IMF's economic indicators for Jordan foresee a Gross Domestic Product (GDP) growth of 2.6 percent for 2023 and 2024, along with three percent for the years 2026 to 2028. Inflation is expected to rise to 2.7 percent in the current year from 2.2 percent in 2023, returning to a decline in 2025 at 2.4 percent and stabilizing at 2.5 percent for the years 2026 to 2028.

The projection also anticipates a decrease in the general government debt-to-GDP ratio from 112.7 percent in 2024 to 110.4 percent and 108.2 percent in 2027 and 2028, respectively. Jordan's public debt, excluding social security guarantees, is expected to reach 78.6 percent of GDP in 2028, down from an anticipated 88.3 percent in 2024.

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